Nigel Buckley-Ryan, UK Sales Director, Merchants, Södra Wood, discusses why it’s so important to know your timber supplier well.
Back in October 2018, the Telegraph warned of the potential consequences of a ‘no deal’ Brexit for the construction sector. It highlighted, amongst other impacts, the possibility of delays to raw materials and the effect this might have on the government’s plans to build 300,000 new homes a year.
Three months on, no one can really say with any great certainty what a deal – or lack of it – will mean. But common sense would suggest that asking some ‘what-ifs’ would be prudent. Specifically, what might all this mean to merchants retailing timber? Should I be worried that my Trusted Supply Partner won’t be able to maintain on-demand timber supply? To consider the potential implications and fall-out, we need to look at the mechanism that currently controls how timber is imported into the UK.
First, let’s scope the size of the challenge. Data from the Timber Trade Federation shows that currently 66 per cent of the solid wood consumed in the UK is imported. Around 90 per cent of the timber used in housebuilding and construction is of European origin. Every year UK entry ports land a staggering 11.3 million m3 of solid wood. To give that a sense of physical scale (you’ll see why it matters later) that’s a timber volume that would fill Wembley Stadium two and a half times.
Over 60 per cent of this imported timber comes from Europe, principally from Scandinavia. The value of the timber sector is significant: it ranks within the UK’s top 20 industries.
As part of the Customs Union, timber entering the country from the EU can clear our ports almost immediately. Because we have rigorous EU member frameworks in place to ensure wood is sourced legally and sustainably, no further customs checks or inspections are required.
But should Brexit see us leave the Customs Union on 29 March 2019, the process is likely to change. If we end up without a reciprocal compliance framework in place, any timber landing from Europe will be treated as if it came from outside the EU. This means, just like lumber from North America for example, customs clearance could take up to seven, or perhaps even 10, days. In this eventuality, EU-sourced timber would have to be stored by importers pending paperwork. They will demand space and appropriate facilities to maintain products in premium condition.
In a no deal scenario, businesses importing timber from the EU and EEA and placing it on the EU market will need to exercise due diligence to demonstrate that they are importing legally harvested timber. That proof could potentially be required for every consignment that lands.
This potential change to frictionless imports could have significant business implications. Firstly, let’s take construction sector workflow. Merchants rely on next-day supply on demand because construction customers need Just-In-Time delivery to site. Merchants will need to be sure their timber importer has sufficient landed stockholding, storage resources and infrastructure available to maintain continuous supply and overcome any customs delays.
Secondly, there’s the question of cost increases. Any new customs regime will only increase statutory administration – requiring manpower and time from both government and importers alike. It’s no coincidence that, since April last year, DEFRA has increased its headcount by 1,400 to 4,900 just to deal with the potential effects of leaving the EU.
Importers may need to pass these new clearance and storage costs down the supply chain. Merchants, in turn, could have to pass these costs onto customers – a potentially tricky discussion given the already relatively low margins in the construction sector.
The fallout will likely hit some importers harder than others, depending on their setup and resources. Fortunately, Södra already has several years’ experience importing from non-EU countries and, as a vertically integrated business – all the way from owning the forests to manufacturing and UK distribution – we are well placed to cope with Brexit challenges. Similarly, operating three British dock storage terminals offers some flexibility to adjust stockholding to provide a buffer against potential customs delays.
As the government says, excessive trade stockpiling could fuel the perfect storm. The continued supply of EU timber to Great Britain and Ireland is not threatened. But now more than ever, merchants who talk openly to supply partners will be best-placed to understand and plan for the possible changes afoot.
Address: Södra Wood Ltd, Unit 18/19, Cirencester Office Park, Tetbury Road, Cirencester GL7 6JJ
Phone: +44 (0)1285 646000
Fax: +44 (0)1285 646020
Email: [email protected]
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